US Herb Market Report shows dynamism of immunity supplements

In this week’s blog, we look in more detail at the American Botanical Council’s 2019 Herb Market Report, which is based on US retail sales data provided by SPINS and the Nutrition Business Journal. According to the report, US consumers spent an estimated US$9.6bn on herbal dietary supplements in 2019, an 8.6% increase vs 2018.

For the first time, CBD made the list of 40 top-selling ingredients in the mainstream channel, where it ranked 9th at just under US$36mn, up 872% vs 2018. For the second year, CBD was the top-selling botanical sold as a dietary supplement in natural retail outlets.

Sales of immune health-related ingredients also rose sharply. In H1 2020, elderberry had the second-highest increase in the mainstream channel (+241%), making it the third top-selling ingredient; it was up 126% in the natural channel. Echinacea grew by 50%+ in both channels.

Other herbal & natural ingredients that have performed well include oregano (up 75% in the natural channel and 91% in the mainstream channel in H1 2020), which is positioned for respiratory symptoms such as cough, as well as astragalus root and mushrooms / fungi-derived ingredients with an immunity positioning. According to SPINS, sales of mushrooms (other) advanced by 84% in the natural channel and an exceptional 495% in the mainstream channel.

The report indicates that while dietary supplements with immunity positioning were the primary growth driver in the US market in the first half of 2020, other VMS ingredients also performed well, particularly those with a stress or sleep positioning. As of mid-June 2020, supplement sales appear to have levelled off; but if H1 2020 is any indication, the US VMS industry is on track for another record-breaking year.

For the full report, go the American Botanical Council’s website and download the PDF link.

Also, ensure that you have registered to join Nicholas online on 30 September for an all-new hot topics webinarYou will hear about key trends, including the impact of Covid-19, Distribution, e-Detailing and Sustainability. To find out more or register to join, please contact elizabeth.bernos@NicholasHall.com.

Market Movers Q1: CCA, VMS brands among fastest movers

CHCINACTION

In this week’s blog, we take a closer look at our newly published Market Movers data for MAT Q1 2020, which highlights the brands that performed best and worst in terms of value sales growth or decline in that period. Certain marketers like RB, which last week reported a 12% rise in its OTC portfolio in Q2 2020, have found success from having a well-positioned portfolio of power brands in fast-growing, Covid-driven CHC categories, such as cough & cold remedies (Mucinex), immunity supplements (Airborne) and antiseptics & disinfectants (Dettol).

P&G also reported double-digit organic growth of its Personal Health Care portfolio in Q2 (fiscal Q4), powered by Vicks, which continues to gain share. Vicks NyQuil / DayQuil combo packs were among the six fastest-growing brands in MAT Q1 2020, along with one of China’s leading systemic cold & flu remedies, 999 Gan Mao Ling. VMS products also featured strongly among the Top 6 fastest-growing brands, with Olly and Emergen-C performing well in the US market thanks to their stress / immunity positioning, and Double Whale Vitamin D Drops achieving high growth in China. J&J’s Tylenol, the No.1 analgesic brand globally, also continues to produce dynamic Covid-driven growth.

Screen Shot 2020-08-03 at 12.22.04.png

Asia-Pacific was the region that underperformed most in MAT Q1 2020 – achieving just 3.4% growth vs 6.3% for North America and Europe – so it is no surprise that five of the Top 6 worst-performing brands are from China or Japan. Tonics & cure alls was the subcategory most responsible for Asia-Pacific’s relatively low growth, with category sales down 25% in China, owing to issues with donkey breeding that have resulted in rising raw material costs and subsequent price rises, affecting two brands in particular – Dong-e E-jiao and Fu Fang E Jiao Jiang – while Hong Mao Medicated Wine was affected by negative claims.

OTC tonic drinks is another VMS subcategory hit by declining sales, with a continued downturn in Japan where the old, male consumer base is retiring and brands face competition from energy drinks. Takeda’s Alinamin EX was among the brands that declined fastest in MAT Q1 2020. Another CHC subcategory affected by weaker sales in Q1 was antacids, as a result of the withdrawal of ranitidine-based antacids from the market owing to concerns around NDMA in the formulation. Sanofi’s Zantac was among the key brands impacted, with Zantac 150 in sharp decline in the US market.

Today is the last chance to pre-order our upcoming Analgesics 2020: Assessing the Current & Future Self-Care Market for Pain Relief at the discounted rate and save up to GB£1,800! Contact melissa.lee@NicholasHall.com to order or find out about special discounts available on purchases of more than one report title!

Immunity sales & NPD activity on the rise

CHCINACTION

One of the newer CHC subcategories that appeared in the Top 10 biggest contributors to global consumer healthcare growth in the MAT Q1 2010 period was immune supplements, with the subcategory producing a 28.5% global upturn in the year to end-March 2020. Along with vitamin C products, probiotics and multivitamins, immune supplements were among several major VMS contributors to growth in the first quarter.

For 2019, our CHC New Products Tracker service recorded 95 new product developments in the herbal & natural immune stimulants subcategory, making it the 14th most active subcategory overall in the consumer healthcare market. So far in 2020, immune supplements are already in the Top 10 most active subcategories – a sign of the rapid increase in new product development in response to the Covid-19 pandemic – and we fully expect this growth in NPD activity to accelerate over the remainder of the year.

Screen Shot 2020-07-13 at 12.50.19.png

There has been a wide array of immunity NPD activity across all regions, notably Europe, North America and Asia-Pacific. In certain markets, such as India and China, there is also likely to be a rise in sales of country-specific natural remedies (Ayurvedic medicine and TCM) positioned for immunity support, though marketers will have to be wary of government clampdowns on products that are claimed to prevent or cure Covid-19.

Notable immunity supplement launches in the USA so far in 2020 include GSK’s Emergen-C Turmeric & Ginger and Emergen-C Elderberry, available in fizzy drink mixes, and RB’s Airborne Immune + Natural Energy Ready To Drink Shot. In Europe, Neuraxpharm unveiled Preventan Clasic in Spain and Italy, while Sambcol Immuno Forte and Sambucol Kids + Vitamin C were rolled out in Germany. As for Asia-Pacific, Grandma’s Kadha effervescent tablets were launched in India and Sanofi’s Cenovis line was relaunched in Australia.

Thousands of innovations are launched every year in the global consumer healthcare market, but relatively few offer notable new benefits for consumers in terms of delivery format or formulation. Which new products are breaking through and offering a unique proposition? Where will new product development take the CHC market in future? Contact Melissa Lee (melissa.lee@nicholashall.com) today to pick up your copy of the Innovation in CHC report.

How will CHC supply chains evolve in Covid-19’s wake?

CHCINACTION

Supply chain issues are high on the agenda of consumer healthcare marketers in the wake of the Covid-19 pandemic. Bayer said in its Q1 results that its Consumer Health division was able to respond very flexibly to significantly higher volumes and shifts in the product mix thanks to its supply chain operation. In addition, RB last week appointed Sami Naffakh as Chief Supply Officer and member of the Executive Committee, effective 1st July 2020. RB CEO, Laxman Narasimhan, said: “Throughout the Covid-19 pandemic, the global supply chain teams have worked tirelessly to step up for our consumers and our customers. As we continue to ‘navigate our new normal’, we must also start to focus on our medium-to-longer-term supply needs across the entire, diverse portfolio.”

Novartis’ supply chain has also coped well during the pandemic, thanks to the extraordinary efforts of its staff – as outlined in this report – but some companies have been harder hit. In February 2020, Blackmores downgraded its FY2020 forecast saying that, while the outbreak has increased demand for key immunity products, this has been countered by supply chain disruptions that the company expected would continue to affect China sales for at least 2-3 months.

As our graphic below shows, China is a key producer of active ingredients (APIs), and absolutely vital to the world supply of ascorbic acid (vitamin C), for example. India, which imports most of its APIs from China, has been hit hard by disruptions in the supply chain, and in March 2020 the Government banned the export of 20+ APIs to protect the supply of essential medicines in the domestic market. This had knock-on effects around the globe, however last week India’s Directorate General of Foreign Trade lifted restrictions on the export of active pharmaceutical ingredients of paracetamol.

China, IndiaIn a recent report by the Economist Intelligence Unit (EIU), called “The Great Unwinding”, more and more companies are said to be moving parts of their supply chains away from China, a trend accelerated by Covid-19, with multinationals seeking to build “quasi-independent regional supply chains in the Americas and Europe”, to ensure future resilience. In addition, the report indicates that another long-lasting impact of Covid-19 will be companies looking to store inventory in “strategic locations from where it can be easily accessed and delivered to customers”.

The pharmaceutical industry is also facing rising prices of raw material. According to data from India’s Pharmaceutical Export Promotion Council (Pharmexcil), the cost of paracetamol went up up 50-60% at the start of the Covid-19 pandemic, and the prices of vitamins increased by 40-50%. As the EIU report indicates, companies will need to think strategically about pricing models, given that “both the regionalisation of supply chains and the build-up of strategic inventories will push up final goods prices, denting a product’s competitiveness”. However, one of the upsides to this change is that “a more regionalised supply chain will offer opportunities for companies to focus more on local tastes amid a greater capacity for product differentiation”.

Very soon we will be publishing the second edition of our hot topic review, Coronavirus 2020 and its potential impact on CHCThis report from our Competitive Intelligence & Market Analysis (CIMA) division explores the response to the pandemic from CHC brands and marketers as well as the overall impact on CHC to date. You will also be able to read about trends observed so far (key categories impacted, how consumer behaviour has changed etc), how key CHC players performed in Q1 and projections for the near and longer-term.  If you have purchased the original Coronavirus 2020 Review, you will receive the 2nd edition free of charge. For more information, or to purchase your copy, please contact Melissa.Lee@NicholasHall.com

CHC market forecast to hold up well in 2020

CHCINACTION

Forecasts released by Nicholas Hall’s CHC sales database DB6 project that the global retail CHC market is expected to slow to 3.5% in 2020 amid the Covid-19 pandemic.

  • Analgesics are expected to increase to 6.1% driven by strong sales of paracetamol-based systemics, while topicals are forecast to slow to 3.3% in spite of the switch of Voltaren in USA
  • CCA is projected to be the fastest-growing category with an increase of 6.5% boosted by coronavirus and reports of a high incidence of seasonal cold & flu at the start of 2020
  • GIs (+0.4%) and Derma (+0.8%) are expected to remain static as consumers cut back on non-essential purchases amid the tougher economic environment
  • Antiseptics & disinfectants are forecast to buck the low-growth trend in derma with a double-digit increase
  • Lifestyle CHC sales are predicted to slow to 1.8%, with erectile dysfunction (+13.2%) and sedatives & sleep aids (+7.8%) bright spots in an otherwise challenging category
  • VMS sales are expected to maintain growth of 3.4% with anticipated gains in some subcategories — notably vitamins C & D, zinc and immune supplements, offset by a deceleration in some other subcategories

The market is expected to bounce back in the longer term with a forecast CAGR 24/19 of 4.3% and CAGR 29/24 of 4.7% driven by switch, most notably of erectile dysfunction and daily oral contraceptives. CBD is not included in these retail forecasts.

0.jpg

DB6 VP, Celine Waller writes: The Covid-19 pandemic has prompted an unprecedented surge in sales of certain CHC products as consumers have stocked up on essential medicines and sought products to protect their health. However, latest data points suggest that this spike has been short-lived with the market now stabilising and in some cases receding. We expect this trend to continue over the next few months, leading to a slight slowdown in CHC retail sales across 2020 in its entirety, although of course the industry is expected to be far more resilient than many others.

However, this only tells part of the story – as consumers are unwilling or not permitted to leave their homes, we expect an acceleration of the channel shift from bricks & mortar to e-Commerce. CHC sales in the Internet & Mail Order channel are forecast to increase by 22.5% in 2020. This will boost growth of the holistic “all channels” view of the market, which also includes CBD, to 5.0% in 2020 (an improvement on 4.3% in 2019). Internet & Mail Order is expected to account for 19.2% of the total CHC market within next decade, more than doubling its share from 9.4% currently. 

We are pleased to announce the latest DB6 market forecasts are now available! With over 150,000 pieces of data across 63 markets, DB6 now includes topline data across all channels of distribution, including e-Commerce! To find out more about our extensive database or to set up a free demo, please contact Kate.Holdcroft@Nicholashall.com.

Assessing Covid-19’s impact on the VMS industry

CHCINACTION

Despite various countries going into lockdown, governments are still allowing “essential” services and businesses to remain operational, putting the role of the dietary supplements industry in the spotlight. In some countries, like New Zealand, supplement marketers are allowed to maintain their operations as long as they are supplying “essential” businesses, such as pharmacies and supermarkets. However, according to the guidance provided by New Zealand Natural Health Products, health food stores do not fit the description of “essential” businesses.

The situation is similar but more complex in the USA, home to the world’s No.1 VMS market. While essential food and drug suppliers are open for business during Covid-19 restrictions, industry leaders are working to ensure that the same applies to speciality health food stores and cannabis dispensaries. No specific federal regulation is in place, but “essential business” status is being determined at state and local level. While California most decisively classified workers supporting cannabis and dietary supplement retail as essential workers, and Illinois added licensed medical cannabis dispensaries and cultivation centres to its essential healthcare operations list, not all states have set such guidelines.

tanyaconstantine-9834996ea1df40d3ab707d31df8fb3b3.jpg

In a letter to state governors, industry associations including the Consumer Healthcare Products Association urge that supplement supply chains remain open in all states, arguing that now more than ever, consumers need essential nutrients to stay fit and healthy and proactively reduce their risk of chronic diseases without burdening an already overstretched healthcare system. They write: “As each of you plan your own approach to this challenging issue, we respectfully request you mirror White House / Centers for Disease Control & Prevention guidelines and make special accommodation for critical infrastructure industries that specifically include not only conventional foods but all subcategories of food, including dietary supplements, infant formulas, medical foods and spices & flavours.”

As for how the Covid-19 crisis will affect the VMS market, it’s clear that some categories stand to benefit more than others. Herbal & natural immune stimulants and vitamin C supplements are likely to see the biggest boost, as long as supply chains can be maintained. In certain markets, such as India and China, there is likely to be a rise in sales of country-specific natural remedies (Ayurvedic medicine and TCM) positioned for immunity support, though marketers will have to be wary of government clampdowns on products that are claimed to prevent or cure Covid-19.

For a full analysis of Covid-19’s impact on the global CHC market, pick up a copy of our all-new Hot Topic review Coronavirus 2020 and its potential impact on CHC from Nicholas Hall’s CIMA division. Buyers of this report will also receive a situation update in six months time. For more information, or to purchase your copy, please contact melissa.lee@NicholasHall.com.

Nestle and Valbiotis in prediabetes partnership

CHCINACTION

Last week, French-based R&D company Valbiotis signed a global long-term strategic partnership with Nestle Health Science for the development and commercialisation of Totum-63, a patented combination of five plant extracts specifically designed to reduce the risk of developing T2 diabetes in prediabetics. According to reports, Nestle Health Science will pay CHF5mn (US$5.1mn) upfront, development & sales milestone payments up to CHF66mn (US$68mn) and tiered royalties on net sales. The partnership will support Valbiotis’ work in a number of ways, including funding the latest clinical development phase until health claims are obtained in USA and Europe. 

Back in September 2019, Valbiotis released positive results from the Phase IIa study of Totum-63, revealing that it met its primary endpoint of reducing fasting blood glucose levels among 51 participants who received 5g / day or placebo for six months. The full results show that Totum-63 also met secondary endpoints, significantly reducing blood triglyceride levels by 32.2%, fatty liver index by 18.7%, arterial hypertension in hypertensive people and blood LDL cholesterol levels by 11.7% vs placebo. A preclinical study (in mice) also found that Totum-63 corrected blood levels of insulin, glucagon and glucagon-like peptide-1, hormones central to the regulation of blood glucose. At the time, Valbiotis CEO Sebastien Peltier said these results pave the way for new opportunities in “promising markets”, such as non-alcoholic fatty liver or arterial hypertension.

valbiotis-logo.jpg

Diabesity was one of the chapters in our recent signature New Paradigms report, with one section looking at the huge potential of supplements for diabetes management. However, many of these are local brands that have only managed to carve out a small niche in their respective markets. The potential for a CHC brand for prediabetes / diabetes with a truly global scale is vast. According to Valbiotis, there are an estimated 900mn people worldwide that are prediabetic, and around 700mn people globally are forecast to contract T2 diabetes by 2045.

Nicholas Hall Writes: When Nestle walked away from the Merck Consumer Health bidding in February 2018, citing high price expectations, I wondered what that meant for the Health Science strategy. To judge by Valbiotis and other recent deals, Nestle seems more interested in buying new technologies than brands. Work we’ve done recently in this category has shown that there is a large population at risk of contracting diabetes, particularly in the Emerging Markets; but this prediabetes initiative will require vast amounts of consumer and HCP education. The question is whether the Valbiotis product, in the safe commercial hands of Nestle Health Science, can persuade consumers to take a pill for a condition they don’t yet have. But it’s worth the effort and could be a significant opportunity for both parties.

Join Nicholas Hall and Everything Health in New Jersey on 8 October 2020 to explore The Future is Now! Consumer Healthcare Reimagined with an optional workshop on 9 October hosted by The CHC Training Institute. To book your place and save with the early-bird booking discount, or to find out about sponsorship opportunities, please contact elizabeth.bernos@NicholasHall.com.

Fish oils again under the spotlight

otcinaction

As reported in our newly published Q2 2019 update, herbal & natural supplements are performing well, up 4.4% globally, thanks to a revival in sales in North America that is partly powered by a return to growth for fish oils & omega-3. This well-developed OTC subcategory generates close to US$2bn in global sales, and after two years of decline in 2015 and 2016, turnover has been rising slowly but surely in recent years. An article that appeared in the New York Times over the weekend, however, entitled Should I Take Fish Oil?, has the potential to halt these gains.

Describing the results of omega-3 studies so far as “inconclusive and inconsistent”, the article calls for further large-scale scientific trials, such as the recent VITAL study, which found that omega-3 supplements didn’t reduce the risk of major cardiac events in a usual-risk population, but did reduce the risk in a subset of people with low fish intake by 19%. The article also pointed to environmental concerns about the fish reduction industry, advocating for vegan and algae-based omega-3 supplements instead.

FISH OILS.png

The Council for Responsible Nutrition (CRN) and other industry bodies, like the Global Organization for EPA and DHA Omega-3 (GOED), are obviously concerned about this article and its ramifications for the fish oils market. One thing worth emphasising about the article is that it doesn’t discount the importance of omega-3 fatty acids as essential nutrients and it doesn’t change the current recommendations by authoritative sources who support intake of omega-3 fatty acids for maintaining overall health.

According to the 2015–2020 Dietary Guidelines for Americans, people should aim to consume eight or more ounces of seafood per week, especially fatty fish, however the reality is that the majority of people don’t manage to achieve this through their diet. For many consumers, especially those with a low fish intake, taking omega-3 fatty acid supplements remains the most prudent choice to ensure the adequate levels needed for good health.

Only two weeks to go until Nicholas Hall’s OTC.NewDirections Executive Conferencetaking place in London on 14 November 2019! Nicholas will be joined by experts from companies including Bayer, Mundipharma and J&J to review key issues impacting our industry and ensure that you are Keeping Consumers in the Spotlight. Unable to join us? Watch Nicholas’ opening address live on the day here at 09:05 on 14 November. To experience the event in full, you can book your place or find out more by contacting jennifer.odonnell@NicholasHall.com without delay.

Global OTC market still subdued in Q2

otcinaction

New figures from Nicholas Hall’s OTC sales database DB6 reveal that, in MAT Q2 2019 (the 12 months to end-June 2019), the global OTC market remained subdued, recording an increase of just 3.6% to total US$137.9bn in turnover. North America generated growth of 2.6%, with USA (+2.7%) improving slightly compared to MAT Q1; however, the market continues to be held back by a lack of switch activity. Canada performed poorly with sales up by just 2.1%.

In Europe (+2.1%), the OTC market also remained sluggish, with most key markets posting low single-digit growth, while Russia (-0.6%), France (-1.4%) and Switzerland recorded declines. Germany (+0.1%), Italy (+2.6%) and the UK (+1.1%) all managed modest increases. Poland was the one bright spot with a rise of 7.9%, driven by high levels of NPD and Rx-to-OTC switch activity. Looking at the Middle East & Africa, Turkey (+15.8%) remained the fastest-growing of the Top 20 markets, driven by high inflation.

MAT Q2 2019 Top 10.jpg

As for Asia-Pacific, growth decelerated to 4.2%, with slowdowns recorded in China (+5.3%), India (+7.5%) and Australia (+1.6%), while sales in Japan (+0.9%) remained flat. Both China and India were impeded by a comparatively low-key cough & cold season and weakening economies. Latin America (+8.3%) continued to be the best performing region, with the two largest OTC markets Brazil (+7.7%) and Mexico (+9.3%) showing resilience in the face of a challenging macroeconomic landscape.

Vitamins, minerals & supplements still generate the largest share (30%) of the global OTC market by major category, but growth slowed in Q2 to 3.7%. Key categories like probiotics and multivitamins reported slowdowns in Q2 2019, especially in the USA, which is struggling this year to replicate the strong performance of its dietary supplements market in 2018.

Nicholas Hall’s Future Opportunities & Growth Drivers in VMS – A Strategic Review of Vitamins, Minerals & Supplements is now available! This all-new report analyses a range of VMS categories including multivitamins, probiotics, OTC tonic drinks, mineral supplements plus many others, alongside looking at the latest trends, brand studies and launch activity. Click here to purchase your copy or to take a look at the full table of contents! To find out more about this key report, or to order your copy, please contact Melissa.Lee@NicholasHall.com

Natural & Organic a focus for M&A and innovation

otcinaction

Continuing our series of blogs on the 10 Infinity Zones for future CHC growth recently outlined by Nicholas Hall, in this edition we take a closer look at natural & organic products. This is by no means a new trend, but it’s certainly one increasingly on the radar of multinationals, as exemplified by J&J’s recent purchase of Zarbee’s Naturals.

Among herbal & natural cough remedies, Zarbee’s has been gaining share on rivals such as Little Remedies, Hyland’s and Chestal, while also growing faster than most medicated OTC cough remedies. Another growth driver in the US market is Maty’s all-natural and organic range, including honey-based cough remedies, while Unilever recently bought Olly Nutrition, another range of VMS products with a strong emphasis on natural ingredients, such as the 10 phytonutrients in its Super Foods Multi line.

olly-kids-superfoods-front_1700x

A+P for most herbal & natural products often emphasises the importance of quality standards and – increasingly – organic and responsibly-­sourced ingredients. In China, the No.1 probiotic brand Biostime (Health & Happiness for Institut Rosell) is promoted on the basis of the organic sourcing of its ingredients, while marketing involving brand ambassador Juliette Binoche also emphasises the natural heritage of the brand.

According to OTC New Products Tracker, the number of launches that include the word “organic” either in their branding or list of ingredients is growing fast, with 246 innovations in 2018 vs 168 in 2017 and just 81 in 2016. Over half of these products are unsurprisingly classified as vitamins, minerals & supplements, however there is also a growing number of “organic” Lifestyle OTCs, especially among medical cannabis products, sedatives & sleep aids and stimulants.

Last chance to pre-order Nicholas Hall’s New Paradigms for CHC 2019: Over the Horizon, written by Nicholas himself! Examine each aspect of the CHC industry in 20 chapters, with a focus on major issues including Regulation, Pharmacy Point-of-Care, M&A, Switch and much more. Nicholas will also unveil the “infinity zones” he has identified as being crucial to the future growth of the industry. In addition to this, you can upgrade your purchase to include a customised in-house presentation or webinar with Nicholas for an additional GB£10,000. To find out more or to place your order, please contact melissa.lee@NicholasHall.com.